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has been made a part of the record in the instant case, and to
the extent necessary to decide the issues before us, we rely on
the facts found by the Court in that decision.
Mount Mercy Associates (Mount Mercy or the partnership) was
formed to acquire property which overlooked the Hudson River in
Westchester County, New York. The partnership planned to build
residential condominium units on the property. The property was
owned by the Institution of Mercy, a not-for-profit corporation
wholly owned by the Sisters of Mercy (Sisters), a religious
order. The Sisters resided at and operated a nursing home in the
Mount Mercy convent building on the property offered for sale.
The convent building and surrounding grounds were situated on
approximately 5 acres (the convent property). As a condition of
the sale, the Sisters desired continued use of the convent
property. The Institution of Mercy offered the entire property
for sale at a $7.5 million asking price.
The partnership's Confidential Private Placement Memorandum
(Memorandum) outlined plans to purchase the property from the
Institution of Mercy. There were no plans to develop the convent
property. Instead, the partnership intended to build up to 250
luxury condominiums on the remaining unimproved property. It was
anticipated and understood, in accordance with the Sisters'
desire to remain in possession of the convent property, that the
partnership intended to deed the convent property back to the
Institution of Mercy. To maximize anticipated tax benefits, 50
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